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Rural Development will combine into a single regulation its four guaranteed loan programs: 1) Water and Waste Disposal, 2) Community Facilities, 3) Business and Industry, and 4) Rural Energy for America. The new regulation will encompass the policies and procedures for guaranteed loan making and servicing, lender reporting, and program monitoring. The proposed action will enable Rural Development to simplify, improve, and enhance the delivery of these four guaranteed loan programs, and better manage the risks inherent with making and servicing guaranteed loans and will result in an improved customer experience for lenders trying to access these programs. This new structure will also make it more efficient and faster to promulgate regulations associated with amending existing programs or incorporating newly authorized programs in the future.

Through this regulation, Rural Development will include statutory changes to implement sections 6103, 6402, 6418, 9001 and 9007 of the Agriculture Improvement Act of 2018 (2018 Farm Bill).

• Section 6103 provides for refinancing of a debt obligation of a rural hospital as an eligible loan purpose for guarantees.

• Section 6402 expands the population cap for guaranteed lending for the Water and Waste program and the Community Facilities program to 50,000.

• Section 6418 provides that Rural Development may charge and collect fees in such amounts as to bring down the costs of subsidies of a guaranteed loan.

• Section 9001 amends the definition of "renewable energy system" to include other components and ancillary infrastructure of a system, such as a storage system.

• Section 9007 allows loan guarantees for the purchase and installation of energy efficient equipment or systems for agricultural production or processing for agricultural producers only.

Statement of Need:

Rural Development is combining its four guaranteed loan programs: 1) Water and Waste Disposal; 2) Community Facilities; 3) Business and Industry; and 4) Rural Energy for America into a single regulation. The new regulation will encompass the policies and procedures for guaranteed loan making and servicing, lender reporting, and program monitoring. The proposed action is expected to involve a few substantive policy changes in order to achieve consistency across the included programs and better customer experience for lenders trying to access these programs.

Summary of the Legal Basis:

This regulatory action is not required by statute or court order; however, the underlying statutes authorizing these policies are the Consolidated Farm and Rural Development Act, 7 U.S.C. 1921 et. seq.,  and 9007 of the 2002 Farm Bill as amended, 7 U.S.C. 8107.

Alternatives:

The alternative is to continue operating under the current existing four regulations for these programs.

Anticipated Costs and Benefits:

At this time an estimated cost is not known. The proposed action is expected to reflect current program policy and produce the same policy results, but in a more effective manner. Anticipated benefits include:

• Improve quality customer experience by streamlining and consolidating similar guaranteed loan programs into a client-driven consolidated regulation.
• Advance economic development and access to capital by reducing regulatory complexities and redundancies.
• Improve operational efficiencies and cross-program coordination (oneRD) by enabling staff to learn all RD guaranteed loan programs using one regulation.
• Enable RD to integrate innovation in the delivery of loan guarantees and align with industry lending practices.
• Create a regulation that paves the way for modern processing and servicing to improve portfolio management.

Risks:

N/A